CPI came in at -0.3% m/m in July reducing inflation by 0.1% point to 1.6% y/y, slightly lower than consensus and our forecast. The main contribution to the decrease came as expected from falling prices for clothing. Other large downward price effects came from the alcohol, financial services and food and non-alcoholic drinks, while transport prices increased in July.
UK inflation numbers have been quite volatile, nevertheless today’s inflation numbers support our view that the Bank of England is not in a hurry to hike rates. Our forecast is a first rate hike in Q2 next year 2015.
Details, CPI Inflation July:
CPI, m/m: -0.3 % (Nordea -0.2%; consensus -0.2%; prior 0.2%)
CPI, y/y: 1.6 % (Nordea 1.7%; consensus 1.8%; prior 1.9%)
Nordea